However, I found one downside which is due to a "feature" introduced in bash 4.2: http://lists.gnu.org/archive/html/bug-bash/2011-02/msg00274.html

This broke my path completion completely and I didn't find a way to get the 4.1 behaviour back. Also the workaround suggested in above mentioned thread seems to be available only in emacs mode (afaics vi mode doesn't support the 'shell-expand-line' command.